The Franchise King® | Learn How To Become A Franchisee

Franchise Q & A: Does The SBA Loan Money For Franchises?

does the SBA loan money for franchises

The answer: Yes…the SBA does assist with franchise loans.

(This post may contain affiliate links. Please read my disclosure policy).

The 7 (a ) Loan Program is the most common type of SBA loan. As a matter of fact, some of the best franchise loans around are SBA Loans…lots of them are 7 (a ) Loans.

But, before I share some useful information on SBA Loans-you need to know one very important thing:

The SBA-The US Small Business Administration, does not loan money. Surprised?

What the SBA does is provide guarantees, sometimes up to 85% of the loan amount, that commercial banks…including maybe even the bank right up the street from you, approve.

Tip: When you start looking around for a lender-make sure they are approved for SBA Loans. Then fill out a Loan Application.

If you’re purchasing a franchise, a 7 (a ) Loan may end up being the type of loan you apply for and receive.

Here are the things 7 (a ) SBA Loans can be used for:

  • To provide long-term working capital to use to pay operational expenses, accounts payable and/or to purchase inventory
  • Short-term working capital needs, including seasonal financing, contract performance, construction financing and exporting
  • Revolving funds based on the value of existing inventory and receivables, under special conditions
  • To purchase equipment, machinery, furniture, fixtures, supplies or materials
  • To purchase real estate, including land and buildings
  • To construct a new building or renovate an existing building
  • To establish a new business or assist in the acquisition, operation or expansion of an existing business
  • To refinance existing business debt, under certain conditions


Franchise Q & A: Does The SBA Loan Money For Franchises?

Some banks are SBA Preferred Lenders. Try to get with one of those if possible.

Information about Preferred Lenders:

Free Franchise Quiz
Find Out If You Should Own A Franchise Before You Write the Check
Invalid email address

The Preferred Lenders Program (PLP) is part of SBA’s effort to streamline the procedures necessary to provide financial assistance to the small business community. Under this program, SBA delegates the final credit decision and most servicing and liquidation authority and responsibility to carefully selected PLP lenders. The SBA, however, will continue to check loan eligibility criteria.

To be considered, lenders must have a good track record with the SBA, and must have demonstrated a proficiency in processing and servicing SBA-guaranteed loans.


SBA Loan Video

The SBA produced a short video that explains the 7 (a ) Loan program in an easy to follow way. Enjoy the video!

Do you have any questions about SBA Loans?

Do you have any questions about franchise ownership?

Most of them can be answered by reading this comprehensive article.

Please Share This Article!
Note: When you buy through links on our site, we may earn an affiliate commission. In addition, I've started to use AI to help me craft better article titles and headings.
joel libava

I'm The Franchise King®, Joel Libava. I help prospective franchise owners avoid bank account emptying mistakes.
For 23 years, I’ve been showing people how to make smart, informed decisions on franchises to buy, and I can help you, too!
P.S. I'm not a franchise consultant/broker.

Straightforward Advice
Joel, thank you for taking the time to speak with me yesterday. It was refreshing to finally speak with someone in franchising who dishes out straightforward, candid advice. You provided me with some insightful ideas that I'm giving a good deal of thought and consideration to. I look forward to speaking with you on our next consultation call."
- John Timmins, Columbia, South Carolina
Free Franchise Tools Franchise Compatibility Quiz Net Worth Calculator
VIP Franchise Newsletter

Recommended Reading
How Franchises Work
How Much Is A Franchise?
Pros And Cons Of A Franchise What Is The Franchise Fee? How To Buy A Franchise
Best Franchises To Own

Top 33 Business Ideas
6-Figure Home Businesses Starbucks Franchise Facts
Featured Franchises!
10 Best Franchise Websites
About Franchise Consultants
How To Read A FDD
Questions To Ask Franchisors
Questions To Ask Franchisees Franchise Discovery Day Franchise Reviews
Top 10 Franchise Buying Tips